Tips and ideas and stratigies to negotiate parcel carrier contracts

1. Negotiating Parcel Contracts

7. The basics

8. HAS You EVER NEGOTIATED Minimum charge Insurance Minimum Fuel Surcharge Dim Rule COD Fee Delivery Area Surcharge Residential Surcharge Address correction Reduced

9. HAS You EVER NEGOTIATED Minimum charge Insurance Minimum COD Fee Fuel Surcharge Din Rule Oversize Rule Delivery Area Surcharge Residential Surcharge Address correction Waived

10. HAVE You EVER NEGOTIATED Lock in the base year tariff & rules Per shipment pricing Yearly incentive Quarterly incentive Ramp up period Start Up incentive Flat rates Flat $ amount off Percentage’s off Revenue Thresholds

11. Fuel Surcharges Caveat Emptor Note to self: Are fuel surcharges Negotiable? Can you tell your carrier “ the contract I sign now are the rates I want to pay for the duration of the contract and you will not honor any additional charges for the length of the contract.” Currently the air fuel surcharge is 0 But they have moved 2% of the fuel surcharge into the base tariff every year for the last 4 years Sp with compounding its about 10% of the fuel surcharge formula that’s already baked into the base rate. They did this in anticipation of fuel coming down so they dud not have to forfit all of it back to shippers

18. 50% Off Of What

19. Afghanistan DHL Scale L FedEx Scale O UPS ????? Albania DHL Scale E FedEx ????? UPS Scale 407 Pricing is More complex with international

24. NEW AND IMPROVED WAYS TO ENHANCE YEILD Its not always apples-to-apples AT THE MOMENT UNIQUE TO UPS

25. Accessorial Charges Analysis Accessorial charges can account for as much as 40 % of total spend! Note to self: Do I know the impact to my business

26. Delivery Area Surcharges (DAS) Over 25% of the US population now lives in a DAS zip 23,427 DAS zips out of a total of about 43000 or 53% of all zips UPS in January reclassified 16,826 or 83% of the Commercial Delivery Area zip codes as Extended Commercial Surcharge.

28. Parcel Contract Negotiations

29. Retention Penetration Conversion

30. Penetration Selling for the Carriers : They have some of your business and are pursuing more. Ground, Air, International

33. Presenting your Freight Characteristics What's attractive to the carriers Note to self: Package my book of business to maximize the appeal to the carrier Many Few Number of locations Few Lots Number of shipments Seasonal peak Year round Seasonality High Claims Low claims exposure Liability Few Many Multi piece shipments Low High International v Domestic Long Short Air Distance Short Long Ground distance Low High Delivery density Low High Pick up density Low High Commercial v residential Low High Weight Bad Good Attribute

34. UPS Says the same folks make the decisions for all the products Note to self: Promote ALL the biz to get the best pricing !

35. UPS says the sales folks are commissioned more for inbound collect. Therefore you can get a better deal by holding out the inbound you can control

36. The complexity Of Earned Discounts with package or revenue thresholds

41. IN CONFUSION THERE IS PROFIT They do this, because they can

42. EXAMPLE $ PER WEEK

43. EXAMPLE PKGS PER WEEK

46. 4 TIER DISCOUNT STRUCTURE TARGET

47. They can price specifically to your shipment distribution by weight and zone Cell by Cell / Matrix Incentives

49. Anybody can get 44% off on air and 19% off on ground They know the tricks

50. WHAT SHIPPER KNOWS WHAT THEY ARE PAYING AND HOW WILL A SHIPPER EVER COMPARE WHAT THEY ARE PAYING TO ANOTHER CARRIERS OFFER

54. Pay Attention money is wasted on selecting air services where next day is guaranteed via ground and or second day ground where 2 day air is being used. Note to self: Ask for a service agnostic tariff